US Economic Meltdown Goes Global

Central banks around the world cut interest rates in unison on Wednesday to limit economic damage from the worst financial crisis in 80 years, giving a temporary boost to battered stock markets.

In an unscheduled announcement made as New York traders were reaching their offices, the US Federal Reserve said it was cutting its key federal funds rate by 50 basis points to 1.5 percent.

China, the European Central Bank and central banks in Britain, Canada, Sweden and Switzerland also cut rates in a coordinated response that investors and world leaders had been demanding.

"The central banks of the world have finally woke up to the gravity of the current situation," said Charles Diebel, the head of interest rates strategy at Nomura. "This is a major step in convincing the world that they are serious about stabilizing."

The coordinated cuts included China for the first time. The Bank of Japan said it saw no need to cut Japanese interest rates but that it strongly supported the coordinated rate cuts.

US stocks fell at the start of trade with the Dow, the Nasdaq and the S&P 500 all down more than 2 percent at the open, but quickly recovered in morning trade. European shares received a temporary bounce.

The central bank action contrasted with more grim macroeconomic news, and some analysts questioned whether the move would work.

The International Monetary Fund issued its bleakest forecast in years, saying the world economy was set for a major downturn with the United States and Europe either in or on the brink of recession.

via The Guardian (UK): World’s central banks cut rates to rescue economy

John McCain: Economic Disaster

McSame? How about McWorse?

I’m Natalie Davis, and I approve this message.

America’s Own Kleptocracy

Opinionizer Michael Hudson, at Counterpunch, tells a grim tale of finance and widening of the gap between Haves and Have-Nots:

Overnight, the U.S. Treasury and Federal Reserve have radically changed the character of American capitalism. It is nothing less than a coup d’êtat for the class that FDR called “banksters.” What has happened in the past two weeks threatens to change the coming century – irreversibly, if they can get away with it. This is the largest and most inequitable transfer of wealth since the land giveaways to the railroad barons during the Civil War era.

Read it, and see if you don’t tremble:

America’s Own Kleptocracy

And so it goes: The NYT says other big financiers already are lobbying for more corporate welfare.

Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.

Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.

“The definition of Financial Institution should be as broad as possible,” the Financial Services Roundtable, which represents big financial services companies, wrote in an e-mail message to members on Sunday.

The group said a wide variety of institutions as varied as mortgage lenders and insurance companies should be able to take advantage of the bailout, and that these companies should be able to sell off any investments linked to mortgages.

The scope of the bailout grew over the weekend. As recently as Saturday morning, the Bush administration’s proposal called for Treasury to buy residential or commercial mortgages and related securities. By that evening, the proposal was broadened to give Treasury discretion to buy “any other financial instrument.”